In response to my article yesterday, a reader suggested that I didn't pay enough attention to the "big story" of the city's budget: the big increase in the city's rainy day fund.
Until two years ago, the city's financial policy called for maintaining reserves equal to 12% of the General Fund. In 2021, City Council, on advice from city budget staff, voted to raise the target to 14%. This budget cycle, however, staff recommended raising it again –– all the way to 17%.
As you can see above, there are actually two reserve funds. The Emergency Reserve, which is now set at 10% of the GF, is supposed to be for disaster response. The Budget Stabilization Reserve, now set at 7%, is designed as a financial cushion to weather economic downturns.
After accommodating certain budget requests from Council members, the budget that Council ultimately approved yesterday included a reserve of 16.65%.
If the city stuck with the 14% policy, we'd have roughly $40M extra to spend. If we were still at a 12% policy –– $65M more.